BILL NUMBER: AB 935	CHAPTERED  09/19/00

	CHAPTER   522
	FILED WITH SECRETARY OF STATE   SEPTEMBER 19, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 18, 2000
	PASSED THE ASSEMBLY   AUGUST 22, 2000
	PASSED THE SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   AUGUST 7, 2000
	AMENDED IN SENATE   APRIL 24, 2000
	AMENDED IN ASSEMBLY   JANUARY 10, 2000
	AMENDED IN ASSEMBLY   SEPTEMBER 10, 1999
	AMENDED IN ASSEMBLY   MAY 6, 1999
	AMENDED IN ASSEMBLY   APRIL 12, 1999

INTRODUCED BY   Assembly Member Brewer

                        FEBRUARY 25, 1999

   An act to amend Sections 11003.5, 11018.1, and 11018.10 of the
Business and Professions Code, relating to real estate.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 935, Brewer.  Land sales:  subdivisions.
   Existing law requires any person who intends to offer subdivided
lands within this state for sale or lease to register and file an
application for a public report with the Department of Real Estate
and authorizes the Commissioner of Real Estate to regulate,
investigate, and report to the public regarding specified
transactions pursuant to these provisions.
   This bill would authorize the commissioner to include or prepare
specified disclosure statements in a permit or public report on a
single-site time-share project associated with other component
resorts through a reservation system and pertaining to the effect of
the reservation system on the purchase of an interest in the project.
  The bill would revise the definition of a "single-site time-share
project" as it applies to these provisions, impose additional
requirements on a single-site time-share project if the use of a
reservation system is mandatory, and would provide that the use of a
reservation system shall not be deemed to guarantee a right to use or
occupy accommodations or facilities at more than the site where the
interest is purchased.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 11003.5 of the Business and Professions Code is
amended to read:
   11003.5.  (a) A "time-share project" is one in which a purchaser
receives the right in perpetuity, for life, or for a term of years,
to the recurrent, exclusive use or occupancy of a lot, parcel, unit,
or segment of real property, annually or on some other periodic
basis, for a period of time that has been or will be allotted from
the use or occupancy periods into which the project has been divided.

   (b) A "time-share estate" is a right of occupancy in a time-share
project which is coupled with an estate in the real property.
   (c) A "time-share use" is a license or contractual or membership
right of occupancy in a time-share project which is not coupled with
an estate in the real property.
   (d) An "exchange program" is any method, arrangement, or procedure
for the voluntary exchange of the right to use and occupy
accommodations and facilities among purchasers of time-share
interests or other property interests.  An "exchange program" does
not include the assignment of the right to use and occupy
accommodations and facilities to purchasers of time-share interests
pursuant to a reservation system.  Any method, arrangement, or
procedure that otherwise meets this definition, wherein the purchaser'
s total contractual financial obligation exceeds three thousand
dollars ($3,000) per time-share interest shall be regulated as a
multisite time-share project and shall be subject to the provisions
of this article.
   (e) An "incidental benefit" is an accommodation, product, service,
discount, or other benefit, other than an exchange program, which is
offered to a prospective purchaser of a time-share interest prior to
the end of the rescission period set forth in Section 11024, the
continuing availability of which for the use and enjoyment of owners
of time-share interests in the time-share project is limited to a
term of not more than five years.
   (f) A "multisite time-share project" is any method, arrangement,
or procedure, with respect to which a purchaser obtains, by any
means, a recurring right to use and occupy accommodations or
facilities in a time-share project consisting of more than one
component site, only through use of a reservation system, on a
nonpriority basis.  The term does not include an exchange program
wherein the purchaser's total contractual financial obligation does
not exceed three thousand dollars ($3,000) per time-share interest or
a single-site time-share project.
   (g) A "reservation system" is the method, arrangement, or
procedure by which a purchaser of a time-share interest, (1) in order
to reserve the use and occupancy of any accommodation or facility of
a multisite time-share project or qualified resort vacation club for
one or more use periods is required to compete with other owners of
time-share interests in that multisite time-share project or
qualified resort vacation club or (2) in order to reserve the use and
occupancy of any accommodation or facility of a component site
associated with a single-site time-share project is required to
compete with other owners of time-share interests in those component
sites, regardless of whether that reservation system is operated and
maintained by (A) the person responsible for the operation and
administration of that time-share project, (B) an exchange company,
or (C) any other person.  In the event that an owner of a time-share
interest is required to use an exchange program as the owner's
principal means of obtaining the right to use and occupy the
accommodations and facilities of any time-share project, that
arrangement shall be a reservation system.
   (h) (1) A "single-site time-share project" is a time-share project
consisting of a single geographic site wherein a purchaser of a
time-share interest in that site receives a recurring right to
reserve, on a priority basis, the use or occupancy of accommodations
and facilities at that site.  A single-site time-share project may be
associated with other time-share projects, or other accommodations
under a contractual or membership program through a reservation
system.
   (2) (A) A single-site time-share project shall not be deemed to be
a multisite time-share project solely on the basis of the required
use of a reservation system.  If use of the reservation system is
mandatory, the agreement for affiliation of the single-site
time-share project shall provide for an initial term of not more than
five years, and may further provide for automatic term renewals for
additional successive terms of five years, unless at a duly noticed
meeting of the membership of the association, or pursuant to an
action without a meeting taken in accordance with subdivisions (a),
(b), (c), and (d) of Section 7513 of the Corporations Code, a motion
to terminate the reservation system affiliation agreement is approved
by the membership pursuant to subparagraphs (B), (C), and (D).
   (B) A motion on the question of termination of a reservation
system affiliation agreement may be initiated by any person specified
in subdivision (e) of Section 7510 of the Corporations Code, and
shall be considered by the membership not more than 120 and not less
than 30 days prior to expiration of its term.
   (C) The quorum for any meeting of the membership to consider the
termination of a reservation system affiliation agreement shall be
not more than 30 percent of the voting power of the association
residing in members other than the subdivider.  The vote necessary to
terminate the reservation system affiliation agreement in an action
without a meeting or at a meeting at which a quorum is present by
ballot, in person, or by proxy shall be the greater of (i) 25 percent
of the voting power of the association residing in members other
than the subdivider, or (ii) a majority of the voting power of the
association voting at a meeting or in an action without a meeting by
ballot, in person or by proxy, residing in members other than the
subdivider.
   (D) Notwithstanding subdivision (a) of Section 7513 of the
Corporations Code, an action without a meeting on the question of
termination of a reservation system affiliation agreement may be
taken even if prohibited by the association's articles or bylaws.
   (E) The cost assessed to a time-share owner or to an association
of time-share owners for the reservation system that is more than 10
percent greater than the reservation system assessment for the
immediately preceding fiscal year may not be levied without the vote
or written assent of the same percentage of the voting power of the
association set forth in subparagraph (C).
  SEC. 2.  Section 11018.1 of the Business and Professions Code is
amended to read:
   11018.1.  (a) A copy of the public report of the commissioner,
when issued, shall be given to the prospective purchaser by the
owner, subdivider or agent prior to the execution of a binding
contract or agreement for the sale or lease of any lot or parcel in a
subdivision.  The requirement of this section extends to lots or
parcels offered by the subdivider after repossession.  A receipt
shall be taken from the prospective purchaser in a form and manner as
set forth in regulations of the Real Estate Commissioner.
   (b) A copy of the public report shall be given by the owner,
subdivider or agent at any time, upon oral or written request, to any
member of the public.  A copy of the public report and a statement
advising that a copy of the public report may be obtained from the
owner, subdivider or agent at any time, upon oral or written request,
shall be posted in a conspicuous place at any office where sales or
leases or offers to sell or lease lots within the subdivision are
regularly made.
   (c) At the same time that a public report is required to be given
by the owner, subdivider, or agent pursuant to subdivision (a) with
respect to a common interest development, as defined, in subdivision
(c) of Section 1351 of the Civil Code, the owner, subdivider, or
agent shall give the prospective purchaser a copy of the following
statement:

      "COMMON INTEREST DEVELOPMENT GENERAL INFORMATION

   The project described in the attached Subdivision Public Report is
known as a common-interest development.  Read the public report
carefully for more information about the type of development.  The
development includes common areas and facilities which will be owned
or operated by an owners' association.  Purchase of a lot or unit
automatically entitles and obligates you as a member of the
association and, in most cases, includes a beneficial interest in the
areas and facilities.  Since membership in the association is
mandatory, you should be aware of the following information before
you purchase:
   Your ownership in this development and your rights and remedies as
a member of its association will be controlled by governing
instruments which generally include a Declaration of Restrictions
(also known as CC&R's), Articles of Incorporation (or association)
and bylaws.  The provisions of these documents are intended to be,
and in most cases are, enforceable in a court of law.  Study these
documents carefully before entering into a contract to purchase a
subdivision interest.
   In order to provide funds for operation and maintenance of the
common facilities, the association will levy assessments against your
lot or unit.  If you are delinquent in the payment of assessments,
the association may enforce payment through court proceedings or your
lot or unit may be liened and sold through the exercise of a power
of sale.  The anticipated income and expenses of the association,
including the amount that you may expect to pay through assessments,
are outlined in the proposed budget.  Ask to see a copy of the budget
if the subdivider has not already made it available for your
examination.
   A homeowner association provides a vehicle for the ownership and
use of recreational and other common facilities which were designed
to attract you to buy in this development.  The association also
provides a means to accomplish architectural control and to provide a
base for homeowner interaction on a variety of issues.  The
purchaser of an interest in a common-interest development should
contemplate active participation in the affairs of the association.
He or she should be willing to serve on the board of directors or on
committees created by the board.  In short, "they" in a common
interest development is "you."  Unless you serve as a member of the
governing board or on a committee appointed by the board, your
control of the operation of the common areas and facilities is
limited to your vote as a member of the association.  There are
actions that can be taken by the governing body without a vote of the
members of the association which can have a significant impact upon
the quality of life for association members.
   Until there is a sufficient number of purchasers of lots or units
in a common interest development to elect a majority of the governing
body, it is likely that the subdivider will effectively control the
affairs of the association.  It is frequently necessary and equitable
that the subdivider do so during the early stages of development.
It is vitally important to the owners of individual subdivision
interests that the transition from subdivider to resident-owner
control be accomplished in an orderly manner and in a spirit of
cooperation.
   When contemplating the purchase of a dwelling in a common interest
development, you should consider factors beyond the attractiveness
of the dwelling units themselves.  Study the governing instruments
and give careful thought to whether you will be able to exist happily
in an atmosphere of cooperative living where the interests of the
group must be taken into account as well as the interests of the
individual.  Remember that managing a common interest development is
very much like governing a small community . . .  the management can
serve you well, but you will have to work for its success."

   Failure to provide the statement in accordance with this
subdivision shall not be deemed a violation subject to Section 10185.

   (d) (1) The commissioner may include a disclosure statement in a
permit or public report for a single-site time-share project
associated with other component resorts through a reservation system
pertaining to the effect of reservation systems on the purchase of
interests in those projects.
   (2) Notwithstanding paragraph (1), the commissioner may prepare,
for each single-site time-share project, a separate disclosure
statement relating to the effect of the reservation system on the
purchase of an interest in that project.
   (3) The commissioner shall develop and use a standardized form for
the disclosure permitted pursuant to paragraph (2).
   (4) This statement shall be in 10-point bold typeface and given to
and personally signed by the subdivider or the subdivider's agent
and prospective purchaser as soon as practical prior to the execution
of a binding contract or agreement.
  SEC. 3.  Section 11018.10 of the Business and Professions Code is
amended to read:
   11018.10.  No person shall sell or lease, or offer for sale or
lease in this state any interest in a multisite time-share project
without first obtaining a public report covering each component site
from the Real Estate Commissioner.  For purposes of this section, the
sale of an interest in a single-site time-share project coupled with
a representation that a purchaser shall obtain a guaranteed right to
use and occupy accommodations or facilities at more than one
geographic site, shall be deemed to be the sale of an interest in a
multisite time-share project.  The required use of a reservation
system in itself shall not be deemed to guarantee a right to use or
occupy accommodations or facilities at more than the site where the
interest is purchased.
